Markets live and die on rumours - as the interchangeable saying goes "buy on the rumour, sell on the fact".

However, what happened on Wall Street around three hours before the close of trade (3:08am Sydney time) shows how sensitive markets are to rumours that now abound on social media outlets such as Twitter.

A report on a Twitter account managed by The Associated Press wire service said there had been explosions at the White House and that President Obama had been injured.

Investors, clearly sensitive after last week's bombings in Boston, appear to have sold on an unverified report from a reputable source that terrorism had struck again.

The brief panic from the report - immediately denied by the AP - erased around US$130 billion from the Standard & Poor's 500 Index. Market movers like Apple, Exxon-Mobil and Microsoft were caught up in the selling.

However, Wall Street's broad market indicator quickly recovered to end the day more than 1 per cent higher.